Historic powers finally agreed for Holyrood

A historic deal has been struck between Holyrood and Westminster to deliver new powers over tax and welfare to the Scottish Parliament, in line with pledges made during the independence referendum.

The talks have dragged on since they began almost a year ago and the final sticking point revolved around how Scotland’s block grant from Westminster would be reduced in light of new fundraising powers being devolved as part of the Scotland Bill.

Scotland’s population is projected to grow more slowly than that of the UK’s in the coming years, and the two parties disagreed over how to balance out the financial impact of this after the first five years of the deal.

The Scottish Government had threatened to veto the Scotland Bill if it believed the fiscal framework - the financial arrangements underpinning the legislation - was not fair to Scotland.

But First Minister Nicola Sturgeon announced the agreement yesterday following a fresh offer from the Treasury and a telephone conversation with Chancellor George Osborne.

Ms Sturgeon said “not a single penny” would be taken from the Scottish government’s budget as a result of the deal.

Mr Osborne said the agreement created a “stronger Scotland in a stronger UK” and “delivers on the vow we made to the people of Scotland.”

He added: “It is fair to the taxpayers of all of the UK and it gives Scotland one of the most powerful devolved parliaments in the world.”

Addressing the Holyrood parliament following the agreement, the first minister said: “There is now an agreement in principle that we can recommend to parliament.

“There will be not a single penny of detriment to the Scottish government’s budget as a result of the devolution of powers during the transition period, for the next six years to March 2022.”

Scottish Labour leader Kezia Dugdale welcomed the deal, saying it was “a historic moment for Scotland”. Her party had backed the Scottish government’s position in the negotiations.

She said: “Scottish politics will never be the same again thanks to these new powers. We have entered a new and exciting era of devolution.”

Details of the deal will be published soon so Holyrood scrutiny can begin.